I’ve been trying to find a place I can buy corporate bonds for a
while. I don’t have the capital to open a big account so the lack
of bond options in smaller accounts is really annoying.

Why don’t you look into starting one? It’s probably hard, but it
should be lucrative. If the spreads are really as bad as CF makes
them out to be, then you could make your money there and still
provide value.

Royce

You are correct in that bonds are hugely illiquid as compared to stocks and we wont see an exchange any time soon because of fundamental differences in these types of securities and the way they are issued.

As a former bond trader i can tell you that the industry has traditionally shunned the chance at having more liquidity in bond markets because more visibility = tighter spreads and this means less mark ups/downs. Although certain electronic platforms like Market Axis and Trade Web have provided more liquidity for institutions and spreads have been getting much thinner between the bid and the ask, recent events have widened things out as it has become harder to find homes for distressed issues.(especially since FS companies have traditionally been the largest issuers) What everyone is also failing to mention is that Joe retail investor provides much the of the liquidity to the stock market when Joe Institution wants to bail. Corporate Bonds, based on the larger minimum required investment are prohibitive to most retail investors trading in volume and dont provide insitutions to live off individuals. Lastly I am sure you have a Bloomberg terminal by which you can subscribe to real time bond execution prices. Regardless of what the broker tells you they are accurate given the new reporting requirements. Also make sure you are trading issues with the largest float as it is the biggest determinent of liquidity outside of creditworthiness.

“The NYSE operates the largest centralized bond market of any U.S. exchange.”
http://www.nyse.com/bonds/1207087035646.html

Here’s a perfect example of opening up a new market; sure, the
bond market exists, but its needs to really be opened up into a true,
competitive market. So it’s not opening up a “new” market per se,
but the changes you seek are so instrumental that it would seem
as though a new COMPETITIVE market is coming to the forefront.

Hell, the way intrade competes with the stock/futures markets on a
small level, it’s still competition. Imagine if corporate bonds
also added to that competition, and imagine if even other kinds of
markets were opened up.

Little by little, we can do this, and I agree–however, people need to
KNOW about these things, and their brokers/advisers can’t have
special interests with stocks, i.e., everyone should know that intrade
exists and that there is more than just the NYSE, and that,
of course, corp. bonds exist etc.

Do you think that government should play a role in this, or is it
something we should leave up to the invisible hand? Or, again, should
we both regulate the markets themselves AND the manner in which
financial advisers mention them (since they often leave them out)?

Finally, on the subject of “Maverick” ideas… I say we have a
federal lottery–we could make SOOOOOOO much revenue!!!!!!!!

You are not entirely correct. What you are saying about having to call about pricing used to be the case, but brokers are required to report corporate bond trades to FINRA and the municipal bond transactions are required to be reported to the MSRB.
You can get up-to-date information data on bond trades (which gives your pricing) at http://cxa.marketwatch.com/finra/BondCenter/Default.aspx.

From MC>
I buy and price bonds all the time. And while you are right, prices are reported, the actual price that you can buy or sell at any given point in time is not liquid, so you have to tell the bond desks what you want and at what price, or ask what they have and at what price. Its far from a liquid, efficient market

Lmao